IRS Tax Calculator for Rental Income

Rental Income Tax Formula:

\[ \text{Taxable Income} = \text{Gross Rental Income} - \text{Allowable Expenses} \] \[ \text{Tax} = \text{Taxable Income} \times \text{Federal Tax Rate} + \text{Net Investment Income Tax (if applicable)} \]

Gross Rental Income:

USD

Allowable Expenses:

USD

Federal Tax Rate:

Adjusted Gross Income (AGI):

USD

NIIT Threshold:

USD

Taxable Income:

Base Tax:

Net Investment Income Tax:

Total Tax Due:

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1. What is Rental Income Tax?

Rental income tax is the federal tax imposed on profits earned from renting out property. The taxable amount is calculated by subtracting allowable expenses from gross rental income, then applying the appropriate tax rate plus potential additional taxes like the Net Investment Income Tax (NIIT).

2. How Does the Calculator Work?

The calculator uses the following formulas:

\[ \text{Taxable Income} = \text{Gross Rental Income} - \text{Allowable Expenses} \] \[ \text{Tax} = \text{Taxable Income} \times \text{Federal Tax Rate} + \text{NIIT (if applicable)} \]

Where:

Gross Rental Income — Total rental payments received
Allowable Expenses — Deductible rental property expenses
Federal Tax Rate — Your marginal tax rate
NIIT — 3.8% tax if AGI exceeds threshold ($200,000 single/$250,000 married)

3. Understanding Rental Income Taxation

Details: Rental income is generally considered passive income and may be subject to additional taxes like the 3.8% Net Investment Income Tax for high earners. Proper expense tracking is essential for accurate tax calculation.

4. Using the Calculator

Tips: Enter all amounts in USD. Include all rental-related income and only IRS-approved deductible expenses. The NIIT threshold defaults to $200,000 but can be adjusted for filing status.

5. Frequently Asked Questions (FAQ)

Q1: What expenses are deductible?
A: Mortgage interest, property taxes, operating expenses, depreciation, repairs, and property management fees.

Q2: Is rental income considered earned income?
A: No, it's generally considered passive income unless you're a real estate professional.

Q3: How does depreciation affect my taxes?
A: Depreciation reduces taxable income but may lead to recapture taxes when you sell the property.

Q4: What if I have rental losses?
A: Passive losses may be limited unless you qualify as a real estate professional or meet active participation tests.

Q5: When is NIIT applicable?
A: When your AGI exceeds $200,000 (single) or $250,000 (married filing jointly).